Assistant boss Colin Todd will take over, his first game in charge coming in the Worthington Cup second round tie with Fulham at Craven Cottage on Wednesday.

"This is a really sad day for me," said Smith, known as the Bald Eagle. "I appreciated the chairman offering me the position of Director of Football, but felt I had more to offer the club.

"I will always appreciate Derby County and their magnificent fans for everything they have done for me and my family. I sincerely wish the club and the players every success this season and in the future." Smith's shock departure from the club was announced at a Press conference in Derby this morning.

Derby chairman Lionel Pickering said: "We wanted to continue to use Jim's vast experience in football for the benefit of Derby. He thought carefully about the new role but decided it would be better to leave. We respect that decision."

Smith took over as County boss in the summer of 1995 and led the Rams into the Premiership.

However, the club have endured a miserable start to the new season, winning just once in seven league games.

Smith is one of the most experienced managers in the English game, having started his league managerial career at Colchester United in 1972.

He went on to manage Blackburn, Birmingham, Oxford, QPR, Newcastle and Portsmouth, who he led to the FA Cup semi-finals in 1992.

Todd joined Derby as Smith's assistant last season after serving the club as a player in the 1970s, helping the club to the league title in 1975.

He has worked briefly as manager of Middlesbrough, then took over from Bruce Rioch at Bolton, where he was in charge from 1996 until 1999.

He won the First Division title for the Lancashire club in 1997, only to be relegated the following season.

Former Derby boss Tommy Docherty has blasted the Rams' decision. "Results haven't been good but he has a lot of friends in the game and he will be hard to replace.

"I realise they have only got five points, but doesn't Colin Todd share some responsibility for that as well?"